SEC Charges Decentralized Finance Lender and Top Executives for Raising $30 Million Through Fraudulent Offerings

The Securities and Exchange Commission today charged two Florida men and their Cayman Islands company for unregistered sales of more than $30 million of securities using smart contracts and so-called “decentralized finance” (DeFi) technology, and for misleading investors concerning the operations and profitability of their business DeFi Money Market. According to the SEC’s order, Gregory Keough, Derek Acree, and their company Blockchain Credit Partners offered and sold securities in unregistered offerings through DeFi Money Market from February 2020 to February 2021. The order finds that they used smart contracts to sell two types of digital tokens: mTokens that could be purchased using specified digital assets and that paid 6.25 percent interest, and DMG “governance tokens” that purportedly gave holders certain voting rights, a share of excess profits, and the ability to profit from DMG governance token resales in the secondary market.